WATERLOO COUNTY BOARD OF EDUCATION ACT, 1995
CANADIAN NIAGARA POWER COMPANY, LIMITED ACT, 1995
CONTENTS
Wednesday 29 November 1995
Waterloo County Board of Education Act, 1995, Bill Pr11, Mr Leadston
Gary L. Leadston, MPP
George Ambeault, administrator of financial services, Waterloo County Board of Education
Canadian Niagara Power Company, Limited Act, 1995, Bill Pr12, Mr Hudak
Tim Hudak, MPP
Harry Macdonell, chairman, Canadian Niagara Power Co Ltd
James Fretz, vice-president and general manager, Canadian Niagara Power Co Ltd
City of Brampton Act, 1995, Bill Pr9, Mr Clement
Tony Clement, MPP
Clay Connor, solicitor, city of Brampton
David Fleet, solicitor, LDASK MBC Corp and Bramway Properties Ltd
STANDING COMMITTEE ON REGULATIONS AND PRIVATE BILLS
Chair / Président: Barrett, Toby (Norfolk PC)
Vice-Chair / Vice-Président: Smith, Bruce (Middlesex PC)
*Barrett, Toby (Norfolk PC)
*Bisson, Gilles (Cochrane South / -Sud ND)
*Boushy, Dave (Sarnia PC)
Hastings, John (Etobicoke-Rexdale PC)
*O'Toole, John R. (Durham East / -Est PC)
*Pettit, Trevor (Hamilton Mountain PC)
*Pouliot, Gilles (Lake Nipigon / Lac-Nipigon ND)
*Pupatello, Sandra (Windsor-Sandwich L)
Rollins, E. J. Douglas (Quinte PC)
Ruprecht, Tony (Parkdale L)
*Sergio, Mario (Yorkview L)
*Shea, Derwyn (High Park-Swansea PC)
*Sheehan, Frank (Lincoln PC)
*Smith, Bruce (Middlesex PC)
*In attendance / présents
Substitutions presents / Membres remplaçants présents:
Leadston, Gary L. (Kitchener-Wilmot PC) for Mr Hastings
Spina, Joseph (Brampton North/-Nord PC) for Mr Rollins
Clerk / Greffière: Freedman, Lisa
Also taking part / Autres participants et participantes
Ministry of Municipal Affairs and Housing:
Shea, Derwyn, parliamentary assistant to the minister
Staff / Personnel:
Klein, Susan, legislative counsel
The committee met at 1007 in committee room 1.
The Chair (Mr Toby Barrett): Good morning. I welcome everyone to this our third meeting of the standing committee on regulations and private bills, Wednesday, November 29, 1995.
I think everyone will have an agenda. I remind you the agenda continues to the back of this page as well.
WATERLOO COUNTY BOARD OF EDUCATION ACT, 1995
Consideration of Bill Pr11, An Act respecting the Waterloo County Board of Education.
The Chair: Our first order of business is consideration of Bill Pr11, An Act respecting the Waterloo County Board of Education, and I would ask the sponsor and the applicant to come forward.
Mr Gary L. Leadston (Kitchener-Wilmot): I appreciate the opportunity of appearing before the committee and also to act as a substitute. On my left is George Ambeault from the Waterloo county public school board. He's the administrator of financial services. For those who are not familiar, the Waterloo County Board of Education is a regional board encompassing seven municipalities within the regional municipality of Waterloo. The seven are the city of Kitchener, the city of Waterloo, the city of Cambridge, and the townships of Wilmot, Woolwich, Wellesley and North Dumfries.
I vetted this through the various levels down here in the Clerk's office and evidently it's a relatively routine matter. However, George is here to speak more specifically to the bill and answer any of the detailed questions that the committee members may have. So without delaying the process any further, perhaps George may want to highlight the rationale, his reasons for being here.
Mr George Ambeault: Thank you. As the documentation I've provided has told you, this bill is an attempt to solve a gap in the arrangements being made with the previous government for funding for school boards building capital projects when it introduced the Capital Investment Plan Act.
What actually happened was, we were told that we were no longer required to seek Ontario Municipal Board approval before we issued debentures under the new Ontario financing act. We went ahead with other school boards in the province and did so. We built the schools; the students were in the schools. It came time to apply for our debentures. Legal counsel told us we could not apply for the debentures because we had not received Ontario Municipal Board approval.
After long, convoluted conversations with lawyers it was determined that we could no longer obtain Ontario Municipal Board approval because students were already in the schools; therefore, it no longer had jurisdiction over the process. So in order to obtain our debenture financing for the schools -- we had spent over $4 million of the money in the region, adding on to schools, putting in portables and renovating schools -- we have to have a bill passed that effectively gives us Ontario Municipal Board approval after the fact, and that is what we are seeking today.
It's a process that has been carried out and the bills have been approved for two other school boards last year. The Simcoe county board had its legislation approved and so did the London board of education. So if there are any questions, Mr Chair --
The Chair: Are there any other interested parties who wish to comment? I would ask the parliamentary assistant, are there any comments on behalf of the government?
Mr Derwyn Shea (High Park-Swansea): Clearly, as many members of the committee will know, this is a transitional problem that has been pointed out rightly by the deputant, a transitional problem for approval of certain capital projects. Precedents cited include boards of education for London, Simcoe county and the township of Tay, so we have some precedent to guide us in this. The precedents go back to 1993-94, when there was an attempt to make some changes, appropriate changes I might add. I will also add that the board is within its borrowing limits. The government has no objections to this bill.
The Chair: First question, Mr Pouliot.
Mr Gilles Pouliot (Lake Nipigon): Mr Shea -- and I thank you -- has perhaps answered the second part. I have two very simple questions. Life can be a dream, sometimes complicated by process. Most of us here, a good many of us, have municipal experience, and I think the analogy has some validity. We can parallel your dilemma when it comes to process, and we've all been fearful of the OMB.
I need your help. What is your borrowing capacity and where are you at present? There's no reason why, if the province has a AA rating heading in the negative direction, you should have a AAA rating. So what is your borrowing capacity? How often have you used a credit card, sir?
Mr Ambeault: On credit cards, we do not have board credit cards. There was a bit of a controversy around that last year. I don't remember the numbers off the top of my head, but we are probably about 10% of the borrowing capacity according to the guidelines, maybe a little bit higher.
When we issue a debenture, we issue it in conjunction with the regional municipality, and the last time we issued a debenture we had a higher credit rating than the province of Ontario did at that point.
Mr Pouliot: Four o'clock will come early. With respect, the New Democratic Party, Mr Chair, certainly will be on par with the findings and your opinion and the database that -- Enjoy. Christmas will come late in your case. Go and borrow, and borrow some more.
The Chair: I have a second question. Mr O'Toole.
Mr John O'Toole (Durham East): I guess my question was the same as the previous one to some extent. What is the amount of this particular debenture?
Mr Ambeault: It's $4.5 million.
Mr O'Toole: And what is the government's liability? Do they somehow underwrite the debt load under the municipal -- I guess it's under the regional authority that you're borrowing the money?
Mr Ambeault: The boards have the power to borrow on their own.
Mr O'Toole: On their own, through the regions.
Mr Ambeault: But we are borrowing through the region to reduce our costs by putting a package together. We can reduce our brokerage fee, so we do it as a joint project.
Mr O'Toole: Yes. So I guess the question is, what responsibility or liability does the province have in underwriting? Perhaps that's to the parliamentary assistant.
Mr Shea: At this juncture, as members will know, the prime responsibility rests with the regional board. In the Constitution, I suppose one could argue and stretch the point that ultimately the province is responsible for all debts of all lower-tier governments, but in fact that's something that has only very rarely been invoked in the history of this province. Indeed, the board itself is quite capable of dealing with this, is empowered to deal with this. It is a legitimate expenditure. In fact, in many ways, this is a technical mechanism for them.
Mr O'Toole: Very good. Thank you.
The Chair: Any further questions?
Mr Mario Sergio (Yorkview): Just to be on the safe side, can you ask if there is any one objecting to the bill, please?
The Chair: Is there anyone on the committee objecting to this bill?
Mr Sergio: Not on the committee; in the public.
The Chair: Oh, I'm sorry. Is there anyone in the room objecting to this bill? Hearing none, are the members ready to vote? Hearing the affirmative, again following a procedure of combining several of the sections, I'll pose the question.
Shall sections 1 through to section 4 carry? Carried.
Shall the schedule carry? Carried.
Shall the preamble carry? Carried.
Shall the title carry? Carried.
Shall the bill carry? Carried.
Shall I report the bill to the House? Agreed.
Do I need a motion to waive fees? No.
I wish to thank all parties.
Before we move to the next bill, I would ask the members of our business subcommittee if they could remain very briefly at the end just for some scheduling for a committee.
CANADIAN NIAGARA POWER COMPANY, LIMITED ACT, 1995
Consideration of Bill Pr12, An Act respecting Canadian Niagara Power Company, Limited.
The Chair: Our next order of business is Pr12, An Act respecting Canadian Niagara Power Company, Limited. I would ask the sponsor and the applicant to come forward, please. The sponsor for this bill is MPP Tim Hudak.
Mr Tim Hudak (Niagara South): I am Tim Hudak, the member representing Niagara South, and I am honoured to sponsor Pr12, An Act respecting Canadian Niagara Power Company. Canadian Niagara Power has a rich history in the Niagara Peninsula and is a major employer in my riding as well as in bordering ridings.
I believe that this bill will lead to an enhanced economic environment in my area, and I'm pleased to introduce the members from Canadian Niagara Power, Mr Harry Macdonell is in the middle. He's the chairman of Canadian Niagara Power. To his right is Donald Smith, the director of Canadian Niagara Power and the solicitor. Beside me to my right, is James Fretz, vice-president and general manager.
The Chair: Mr Hudak, do you have anything further say about this bill?
Mr Hudak: I'll let --
The Chair: I would ask the applicants if they wish to comment on this bill.
Mr Harry Macdonell: Canadian Niagara Power was incorporated at the dawn of the electric age in 1892. It built the first power plant on the Canadian side of the Niagara River, and it has generated electricity pretty much continuously since 1905.
Currently, so far as generation is concerned, we have arrangements with Ontario Hydro under which we actually allow Ontario Hydro to use our water downstream to produce more electricity than we can produce. They then keep the excess and return to us an amount of electricity equivalent to the amount that we could have generated.
We also transmit power to the Fort Erie area and we serve 13,000 customers in the Fort Erie area. We sell power to Cornwall, Ontario, and we transmit that by displacement through upstate New York. We sell power to Ontario Hydro, to the extent that we have excess, and then if we have any left over, we sell it to Niagara Mohawk in the United States. We're a full-service company, in other words. We have 80 employees and we think we've done a pretty good job of serving our service area over the many years we have been active.
The reason we're before you here today is that we were incorporated by a special act of the Ontario Legislature. For those of you who don't have a legal background, the effect of being incorporated by a special act of the Legislature is that you are restricted in your activities to those activities that you're specifically authorized to do by the legislation, and of course there are specific restrictions on things that you can do.
1020
For example, in our case, we are only allowed to borrow up to $10 million on the security of real property. I'm sure that, in 1892, that was considered to be an amount of money that no one in their right mind could ever exceed on capital projects but, as you all know, today it's a pretty small amount.
We've also found that just in order to make sure that we fit within our powers, we've had to carry out transactions in a very complicated manner. I'll give you an example: We recently acquired a wind generation plant in Alberta, at Cowley Ridge. It's Canada's largest electrical generating station powered by windmills. In order to do that, we found we had to use a Quebec partnership, of all things, to acquire our interest in an Alberta project. Needless to say, it cost us a great deal in legal and other fees to complete the transaction because it was convoluted and much more complex than it need be.
Mr Pouliot: I want to go after the Quebec partnership after this.
Mr Macdonell: Our purpose in asking for this legislation today, which would treat us in every respect in the way other Ontario business corporations are treated, is simply to give us the freedom to make investments and to pursue our objectives without having to go through the very convoluted processes that we have. In order to do that, we would also be giving up any special powers we have under the legislation that currently exists.
I might just check and make sure that I've covered the things I should. One thing I should explain is that our lease to take water from the Niagara River expires in the year 2009. It was a 100-year lease and it's up at that point in time. Obviously we are going to have to look to alternative arrangements, both for our company activities and also to secure power for our service area. That's one of the reasons we're very active in trying to develop business strategies to expand our operations.
I should comment that we have looked at other investments, and Cowley Ridge is the only one we've made to date, but we see our activities expanding into areas right across Canada.
In connection with this bill, we have consulted with legislative counsel and we hope to talk to all of the stakeholders who might have an interest in what we are doing. We have spoken to Ontario Hydro, of course, the Ministry of the Environment, the Ministry of Finance, the Niagara Parks Commission, the Municipal Electric Association, our own union, which is the International Brotherhood of Electrical Workers. We've also spoken to Ontario Hydro's union, the Power Workers' Union.
As far as we're aware, we can't think of any reason why we should be subject to the restrictions we're currently subject to, and none of the people we have talked to have identified objections to what we are proposing.
That's a quick summary. I'm sure I haven't covered everything, but I'd be happy to answer questions.
The Chair: I would ask, would either one of the other applicants have anything further to add? No. Are there any other interested parties in the room who wish to comment on this bill?
Mr Pouliot: I'd like to get the government's position first and I will have, with respect, some questions for Mr Macdonell.
The Chair: I will ask our parliamentary assistant for Municipal Affairs, Mr Shea, for any comments on the part of the government.
Mr Shea: The government has no objection in general with the application. It has a couple of caveats it just wants to make sure it has got on the record, for the purposes of Hansard especially.
As the applicant has made very clear, the proposed amendments are going to allow Canada Niagara Power to incorporate under the Ontario Business Corporations Act, which will give it the same kind of structure as any other corporation in the province of Ontario, the same rights and the same responsibilities.
CNP currently has a monopoly franchise to supply electricity to the Fort Erie community and it is required to track its rates in neighbouring areas and that should not change as a result of this amendment. As the Chairman has pointed out to you, the power lease expires in 2009.
Mr Gilles Bisson (Cochrane South): The water lease.
Mr Shea: Yes, the water lease -- and they should not expect that lease will necessarily be extended, and if it is, certainly not under the same favourable terms. It is my understanding that CNP has indeed provided written confirmation that it does not expect that the government would consider any extension to CNP under the same terms if they did apply.
Finally, CNP currently wheels electricity through the Ontario Hydro system to supply its customers in Fort Erie. That issue is currently under consideration by the Advisory Committee on Competition in Ontario's Electricity System.
I think with those having been read into the record, the government states it has no objection to the incorporation.
The Chair: I call for questions from committee members to either the applicants or the parliamentary assistant. The first question, Mr Bisson.
Mr Bisson: I actually have a series of questions. Just so I understand, I take it you own water rights on the Niagara River, and on that you have a generating station or stations. How big is it? How many megawatts is that?
Mr Macdonell: Seventy-five megawatts is the capacity of the station. It's actually a 25-cycle station, so it is operated as part of the Ontario Hydro system.
Mr Bisson: Where are they using 25-cycle down here? I thought 25-cycle was all phased out as of this year and next year.
Mr Macdonell: No, there's still a demand for 25-cycle power.
Mr Bisson: Pardon me. "Phased out" is not a very good term in the electrical sense. If it phased out, you'd have real problems in your generation, let me tell you.
So you have a 75-megawatt plant, and that's all you have as a corporate entity that brings in revenue? That's it?
Mr Macdonell: No, we have transmission lines from --
Mr Bisson: No, on the generation side.
Mr Macdonell: On the generation side in Ontario that's our only generating plant.
Mr Bisson: Then the agreement that you have on your water rights is that Ontario Hydro gives you the surplus and through your corporation you supply electricity to the PUC in Fort Erie? Is that how it works?
Mr Macdonell: No, what happens is that we have the right to take sufficient water from the river to generate 100,000 megawatts. In fact, what we have done is agreed with Ontario Hydro that they might take that power and put it through their plant, the Beck plant, further downstream. Because the head is higher, they can actually generate about three times as much electricity as we could generate through our plant.
In effect what happens is that Ontario Hydro will give us back 60-cycle power equivalent to the amount we could generate with our plant and keep the other two thirds for their own use.
Mr Bisson: So they give you back 75 megawatts of 60-cycle power that you then resell.
Mr Macdonell: That's right, and we have to maintain our plant on standby because there still is a 25-cycle load in Ontario, particularly at Hamilton, where Stelco still has a 25-cycle load. I think I'm right, Jim, aren't I? I should defer to the expert next to me, Jim Fretz.
Mr James Fretz: I believe there's about a 40-megawatt maximum 25-cycle demand still in southern Ontario. However, 25-cycle generation is often run through frequency changers and included into the 60-cycle system.
Mr Bisson: Yes, not very efficiently though.
Mr Fretz: So there is a need for 25-cycle.
Mr Bisson: That's why I was asking the question if you're 25-megawatt. I thought Hydro had taken the position actually when we were in government that started with the Liberals, then on to us, that all of the loads would be changed over to 60-cycle as far as customers.
I know in my area, the Pamour mines and a number of them that were running on 25-cycle as supplied through Ontario Hydro had been forced, through negotiations with Ontario Hydro, to go to 60 cycles. That's why I was asking the question. So you're keeping your 75-megawatt plant in operation to supply the customers of Ontario Hydro who still require 25-cycle.
Mr Macdonell: That's right. I should say, the plant does not run very often. By agreement it has to be on standby. It runs sometimes at night, but it's only when Ontario Hydro needs generation from that plant.
Mr Bisson: What I'm trying to figure out here is, when I first looked at the bill and read through it -- it will come as no surprise that myself and my party are not big fans of privatization of Ontario Hydro. It's something that the government is considering doing. None the less, I understand as a corporate entity you've got to survive in some way, so I'm not going to oppose the bill.
1030
But I have a couple of questions, and one question is simply this: The reason that you want to do this is in order to be able to utilize your distribution company, to be able to partner with other people, like "Where are you going with this in the end?"
Mr Macdonell: We obviously want to extend the life of our corporation beyond 2009. So we are looking at a number of investments and one we've made so far is the wind plant in Alberta and we want to make other investments in Canada whenever it's appropriate for us to do so.
An awful lot is happening in the electrical industry, but the opportunity will probably come for us to acquire power from other generators to service our area and, because of our relationship with Niagara Mohawk and also simply because of the work we've done, we think we may be in a position to acquire power from other generators to continue to service our area once our rights on the river expire.
Mr Bisson: So what basically it comes down to, you lose your water rights, you lose your source of revenue and what you want to do is restructure -- well, not restructure but be able to go out and to form the partnerships you need in order to survive as a corporate entity. How many employees do you have now?
Mr Macdonell: We have 80 employees.
Mr Bisson: Okay. I would just add to that, Margaret Harrington, whom you know well, lobbied myself and my friend here a number of times in order to make sure that we understood what the issues were here, and without any further comment I would support your application.
The Chair: Now second question, Mr O'Toole.
Mr O'Toole: Some of my questions have been asked. First of all, as a commission -- just to understand, very primary, I don't have near the knowledge of the background -- is the board an elected body, an appointed body, or how is the current board structured?
Mr Macdonell: I hope I can get this exactly right. Our current board consists of nine members of whom five are nominated by Niagara Mohawk and four are independent. I would say I'm independent. Ron Smith is an independent member of that board. Milan Nastich, who is a former chairman of Ontario Hydro, is on our board and Grant Reuber, whom you may know, a former Deputy Minister of Finance and deputy chairman of the Bank of Montreal, now the chairman of the CDIC, is on our board.
Mr O'Toole: The point I'm trying to make, not necessarily the names particularly, is how do they get there? Are they through partner bodies or is it appointment by order in council? How did they get there?
Mr Macdonell: The company is controlled by Niagara Mohawk, which is a large power utility in upper New York. They are nominated by Niagara Mohawk.
Mr O'Toole: So the parent company really is Niagara Mohawk?
Mr Macdonell: Yes. But you do raise a question. One of the other reasons that we're quite interested in becoming an ordinary Ontario business corporation is that we have issued all the shares we're entitled --
Mr O'Toole: That's my next question.
Mr Macdonell: We would like to seek Canadian shareholders and indeed have had discussions with Canadian shareholders, and this legislation will enable us in fact to make arrangements with other Canadian shareholders to introduce the company.
Mr O'Toole: That's my next question. Really, the main challenge would be to increase your ability to raise capital. Technically, if you want to expand in your borrowing powers, the Business Corporations Act would entitle you to have a borrowing limit, I guess, based on something. Would this become a publicly traded equity kind of thing?
Mr Macdonell: That is certainly something we would like to achieve eventually. We would like to achieve Canadian shareholders. At the present time, the makeup of our company is not one which really lends itself to an initial public offering in securities. But if we could get it restructured and we can reconstitute it so it has a longer future, it would be attractive, I think.
Mr O'Toole: What is your equity today? Is your equity this actual water sale thing you have with Hydro? Buildings? What is your equity or your capital stock? I mean, do you have $10 million in assets?
Mr Macdonell: I can make a guess. It depends on how you value it, but I would think the total value of our assets is somewhere in the order of about $100 million.
Mr O'Toole: So you have lots of equity to go to the capital market to raise capital, I gather.
Mr Macdonell: We have about $100 million in assets, depending on how you value them, obviously, and we don't have any outstanding debt.
Mr O'Toole: So you will go into the capital, preferably, to raise that on the public ability to raise capital, selling shares, equity.
In what area are you going to compete? Who are your competitors? Are you in the generation business or the transmission business? Which part of the business? Hydro is the generator, and to some extent the smaller companies, including the hydro commissions, transmit.
Mr Macdonell: I have difficulty answering that question because I don't know how things will develop in the province of Ontario. We obviously have read the statements that were made in Mr Farlinger's report and the most recent document that Mr Kupcis put out. If opportunities arise in the province of Ontario to become involved in generation, in distribution, those are things we would certainly be interested in. At the moment, the opportunities are often elsewhere in Canada because their policy decisions have been made.
The investments we're looking at right at the moment are on the generation side, but what we would like to do, if we were afforded the opportunity to do so, of course, is to invest in those activities which are closest to our core business and the things we understand.
Mrs Sandra Pupatello (Windsor-Sandwich): What this bill will do is allow you to raise capital and potentially invest in other types of projects, like the power plant that feeds the Chrysler plant in Windsor, TransAlta. You didn't have an opportunity to bid or participate in providing that power for that plant because of the restrictions. With the passing of the bill, then, you'll be able to enter into these types of ventures and, in answer to Mr O'Toole's question, the kinds of private power-generating plants that are popping up now. We have two in Windsor. You have been precluded from participating in potentially being the power provider. This is going to allow you to do that.
Mr Macdonell: That's correct. I wouldn't say we have been prevented, because we actually can do many of these things, but we've had to do them in a very convoluted manner. As I pointed out, we had to use a partnership in Quebec to acquire an asset in Alberta. That's the main reason.
Generally, we've been able to make investments in one way or another, but we'd like to be able to make them the same way others can. And frankly, if there were two companies interested in a project, we might find ourselves at a disadvantage because of the situation we're in. But where it's appropriate for us to do so, something along the lines of the plant you've just described would be of interest to us, yes.
1040
Mr Pouliot: My God, you've done very well, Mr Macdonell. You've survived not only one but two partnerships with la province de Québec. Imagine. But you have no objection trying to get your company listed with the likes of the Vancouver Stock Exchange. Maybe we'll give you a direct number to Murray Pezim. He'd be quite interested in promoting your venture.
But it was matter-of-factly that you endorsed the Alberta Stock Exchange, which is a glorified version of the Vancouver exchange. The Vancouver exchange has shown me in my previous life what not to invest in. Should you get listed on the TSE, your company would become one you would look forward to investing in and we wouldn't have to short your stock.
Would you describe your situation and relationship as unique in the province of Ontario?
Mr Macdonell: It's not unique, but it's certainly unusual. There are very few privately owned generating companies in Ontario. We're not unique. Obviously, there's Gananoque Light and Power, which is a full-service company. Great Lakes in northern Ontario is in much the same position.
Mr Pouliot: I'm envious of the position. Our riding is so underpopulated, and it's 1,000 miles long all the way to Hudson Bay. Then we have Lake Superior and Lake Nipigon. We would like to have the kind of relationship whereby we would do our own thing at home. There's nothing wrong with privatizing, but it would also be nice if we could get part of our capacity back on the Ontario Hydro grid. Grosso modo -- I know it varies; I know you have contingencies to address -- what percentage of what you produce in terms of electricity goes back into the Ontario Hydro grid?
Mr Macdonell: Oh, a very small percentage. Actually, when you come down to it, we actually get most of our electricity from Ontario Hydro, and what we don't need to service Fort Erie and Cornwall is available to Ontario Hydro; it doesn't necessarily go back to it.
It's interesting. We have in fact looked at projects in your riding. As you know, there are some substantial independent power producers, particularly in the Lake Nipigon area.
Mr Pouliot: Yes. You do very well in those initial contracts. We're learning, Mr Macdonell. So you're fully capacitated and you're looking for money to expand.
Mr Macdonell: What I should say is that we're well capitalized at the moment. We have significant assets. We don't have any substantial borrowings. If I gave the impression that we are immediately looking to raise a lot of capital, then I'm sorry; that's the wrong impression. I think we're much more interested in acquiring Canadian shareholders and Canadian partners in our enterprise.
Mr Pouliot: When you talk about equity, with respect, your corporation presents a good front. If I were a banker, should I be concerned about water rentals and the philosophy of "as long as the river flows"; that once you reach the end of an agreement, equity, by virtue of "as long as the river flows," would jeopardize your equity and your ability to borrow? Should I be concerned about that, that when the calendar works and comes to the end of the agreement, equity has a different meaning?
Mr Macdonell: Unless we are able to develop other projects and other businesses for our corporation, clearly, as a banker I don't think you would lend us funds which could not be justified on the basis of revenues we would be able to secure under our current agreement.
Mr Pouliot: I'll buy the preferred and we'll leave the common for the Conservatives. They do very well at that.
I have no question. I'm endorsing this. I think they have a lot of guts in this day and age.
Mr Leadston: To pick up on your endeavour with western Canada on the wind turbines, perhaps if you could harness the wind that's created in committee and in the House, it would be truly unique and truly Canadian.
Mr Bisson: I just want to clarify something. You said a little while ago that very little of the power you generate goes out on the grid. I thought you said your 25-cycle was sold back to Hydro.
Mr Macdonell: Whatever we generate as 25-cycle goes to Hydro. But of course we're not generating all the time. For the most part we're generating at night and we're also generating --
Mr Bisson: You're just there for peak power loads for Stelco.
Mr Macdonell: That's right.
Mr Bisson: Gotcha.
The Chair: Seeing no further questions, are the members of this committee ready to vote?
Shall sections 1 through 5 carry? Carried.
Shall the schedule carry? Carried.
Shall the preamble carry? Carried.
Shall the title carry? Carried.
Shall this bill carry? Carried.
Shall I report this bill to the House? Agreed.
I wish to thank the applicants and the MPP for the area.
Mr Macdonell: We'd like to thank you, Mr Chairman, and your committee.
CITY OF BRAMPTON ACT, 1995
Consideration of Bill Pr9, An Act respecting the City of Brampton.
The Chair: I would ask the sponsor and the applicants to approach the desk and introduce themselves.
I don't know whether he'll be introducing himself, so just as an aside, I thought I'd mention that we have with us the former MPP for High Park-Swansea, David Fleet. Mr Fleet chaired this legislative committee for several years and is also the author of what is known as the Fleet report, I'm told by the clerk.
Mr Tony Clement (Brampton South): My name is Tony Clement, the MPP for Brampton South. Mr Chair, you stole some of my thunder in my introductions, but that's all right. You're the Chair and you're allowed to do that.
I did want to introduce Mr Fleet, and you've indicated his prior life. He is now an exceptionally high-priced lawyer, who is actually very good at his craft. He's one of the foremost experts on property tax law in the province of Ontario and, in my previous life, was quite helpful to me in learning a bit about this area.
To my immediate right is Mr Clay Connor, who is the deputy city solicitor of the law department in the city of Brampton.
Bill Pr9 is an attempt to correct a long tale of woe and misunderstanding which is far too complex for me to even attempt to explain to you. So with the approval of this committee, I would like to pass over to Mr Connor, who can lead you through this and explain the need for the bill.
Mr Clay Connor: I'll try not to make it too complex, but in things like this it's the facts that are always the fun part.
This bill relates to a development property in Brampton in the area of Highway 10 and Highway 7. Part of the lands had been scraped and were being prepared for development. They were no longer used for agricultural purposes, so in 1987 the city of Brampton appealed the assessment of this property.
City staff explained to the property owner, the principal of the company, the nature of the appeal. He understood what was going on or what everybody thought was going to be going on. He didn't attend at the Assessment Review Board hearing.
It got to the Assessment Review Board hearing. The assessor, as is their wont, stood up and made a recommendation: "This is what the assessment should be." The Assessment Review Board chairman agreed with that, made his decision based on that. Everybody went home.
Then, a few months later, the taxpayer got the tax bill and figured something might be amiss. Investigations, through Mr Fleet's office, with the assessment people showed that in fact things were amiss. There had been a major error in the assessment factor of the area of the property, which resulted in the taxpayer being liable for taxes of a little over $100,000 more than they should have been.
1050
Now, by the time this came to light it was too late to appeal the ARB decision. It was too late to apply under section 442 of the Municipal Act for a refund of taxes because of an error, and section 443 was also not available because of what I'd like to call a legal catch-22. Under section 443 you can go back and correct errors for the previous two years, unless the assessment in question was the subject of an assessment appeal, which of course it was because that's where the mistake was made. So we were caught in a catch-22; we couldn't just refund the taxes. Our position with the applicant was if we could think of a legal way to do it where the city of Brampton would not be on the hook for anything more than what our proportionate share of the tax overpayment was, then we'd do it.
So lawyers being what they are, the applicant's solicitors thought of a legal means. They brought an application in the Divisional Court naming the city of Brampton. We've put that on hold pending this private bill application, which we hope will sort everything out. It will put the assessment back to what it should have been in the first place and put all the relevant parties in the same position that they would have been in had this mistake never occurred. We're asking your support in that respect.
The Chair: Any further comments from the applicants? Are there any other interested parties in the room who wish to comment? We'll also record questions. At this point, I would ask the parliamentary assistant to speak on behalf of the government.
Mr Shea: Obviously, this is correcting the 1987 assessment of a property which has been identified in the bill. An incorrect factor was used to calculate the assessment. The time limit for relief has passed and therein lies part of the problem that we face today. We require some technical amendments to allow for the refund, and the city is willing to make the amendments.
For the record, I have to make it very clear that the ministries -- and we have representatives here today, in case there are questions, from Education, Municipal Affairs and Finance -- would normally object to such a request because the legislation was put in place, as some members around this table know only too well, to provide some stability and certainty to the assessment base and to the municipal and school board finances. But it is recognized that circumstances in this case are particularly unique and the government therefore has no objection if the technical amendments are passed to deal with the refunds.
The Chair: I would ask committee members -- I may have missed some hands -- to indicate questions for either the parliamentary assistant or the applicants.
Mr Pouliot: Your courage is great. In Brampton you're looking for ways to enact a refund to give people -- or clients, some clients -- what they should have had long ago. Then you have to pay Mr Fleet. Welcome back, David. From your buildup, it's all warranted. The profession does not come cheap. I mean, you get what you pay for, and in this case you're getting the best of legal advice. Brampton has to undergo, when they open the envelope, some transfer cuts. You're going to give the refund, you're going to pay Mr Fleet and then you're going to get hit, fairly big-time, in terms of a transfer payment. I share in the impasse and the dilemma. You have a lot of problems. I'm not so sure that you are the kind of people in this context I would wish to associate with because you don't have good news written all over you, sir.
Having said this, I will try, on behalf of our party, to cut the meeting short. It never stops to amaze me, though, that from 1987 it takes eight years of process, of playing ping-pong, of addressing a dilemma, commas, periods, phrases, terminology etc. Why did we get into this mess? Is it because of the other honourable profession, which ranks even lower than that profession, us, that we get ourselves into a straitjacket? Personally, I cannot stand to address this kind of endeavour. I did so for years and years up north. We thought those inventions of the devil indeed were dreamed up at Queen's Park by people in business suits who had nothing else to do with their time but to impress people. They've complicated matters. Let's get out of this mess as much as we can. Good luck to you. You shouldn't have had to go through that. That's been going on for eight years.
Mr O'Toole: I heard of similar dilemmas when I was on regional and local council. I guess my first question is, I gather there is an overpayment outstanding since 1987 but none of the money has actually been paid because of the appeal; is that the case?
Mr Connor: Mr Fleet can correct me if I'm wrong, but it's my understanding that because the property ultimately was developed, the owner did have to pay the taxes so he could give a clear tax bill to the lot purchasers.
Mr O'Toole: That's the point I was going to make, because you were saying this occurred in 1987. I gather it was a farm, and when it went from farm use to residential, under some plan of subdivision, it had to be reassessed. That's where the Assessment Review Board came in, looked at it, but it hadn't been developed yet, and said, "It is going to be and it's worth this." Four years later he developed it, but meanwhile he'd paid all the back taxes to give them registered title on the property. Is that kind of the short story, without going into the $4 million?
Mr Connor: Actually, the only problem area was with the year 1987. They were able to use the normal mechanisms to get the assessment to what it should be for years 1988 and on. So it's only a one-year problem.
Mr O'Toole: So it's just a one-time thing, before there was a real application. That's first.
Now, where we always had the problem in the municipality I was with was that the municipality only had the ability to make restitution or correction for its portion of the bill, which was usually 20% or something. The region has another 20% and usually the schools are about 60%. We'd give ours back, but then they'd have to go after the other partners. What is going to happen here? Is this going to allow or require the school boards to remit -- the biggest portion is theirs, I'm sure -- and the region to remit to the applicant the refund?
Mr Connor: That's precisely why we're here, the problem that you've identified.
Mr O'Toole: They won't give it back?
Mr Connor: They weren't specifically asked to. The city took the lead because we were the ones named in the litigation and we're the ones who are responsible for the collection of taxes. But with the particular amendment that is being proposed, it will allow the city to pass the refund, and it will flow through so that the school board and the region would pay their shares.
Mr O'Toole: Has that agreement been achieved or is this, by way of this decision today, going to force them to say -- there's been consultation?
Mr Connor: Both the region and the school board have notice of this. I've talked to staff representatives of both agencies, explained to them the nature of the problem, why we're here and what we're doing, and they didn't indicate any problem.
Mr O'Toole: What are the amounts? Is it $100, $200, $1 million?
Mr Connor: A little over $100,000, of which the school board's share would be slightly over half and the region's in the nature of 25% to 30%. I don't have the exact percentages, but that's the ballpark.
Mr O'Toole: A $100,000 municipal bill is 1% of the mill rate, so it's a lot of money, technically. I think you've answered most of my questions.
Now, the province, under the Assessment Review Board that made the decision ultimately that got you here, does it assume any liabilities by this decision? The municipality is going to pick up the costs of legal, which will probably double your bill. Who's picking up the legal and all that? Is that the municipality?
Mr Connor: The legal fees to the municipality are my normal salary, because I'm in-house counsel. This relates back to Mr Pouliot's question. The city has one less problem. We don't have to pay Mr Fleet; the property owner is doing that.
Mr O'Toole: So in terms of there being any ability to capture any liabilities for the errant decision made by some board, there's no liability on this for the province through its agency, the Assessment Review Board?
Mr Connor: None at all. This will settle everything and everybody will go away happy.
1100
Mr Bisson: I'm reading the briefing note and I get part of my answer. The bill would allow you to give the money back to the property owner, but would it also force the school board and the regional municipality to give back their share of what they got out of this? How do you get your money back from them?
Mr Connor: It's my understanding that it would just be a setoff, in terms that the next normal amount that we would pay over in taxes to the school board and the region would be deducted by their proportionate share of this.
Mr Bisson: But do you need the legislation to do that with the school board or do you need the legislation to give the money back to the property --
Mr Connor: Yes, we do. That's why we're here.
Mr Bisson: That's what I was trying to --
Just to go back to 1987, the owner of the corporation, was he not notified that this was going before the -- it says here in the briefing note that in 1987 you appealed the assessment of the company, "the owners of the subject property. The Assessment Review Board held a hearing of the appeal. No one appeared" from the company. What happened there?
Mr Connor: Yes, I touched on that briefly. What had happened was the owner of the company had had some discussion with municipal staff as to what this appeal was all about and was satisfied with the explanation that he got. Had things gone the way they should have gone, there wouldn't have been a problem.
Mr Bisson: You didn't think it was going to result in a $3-million --
Mr Connor: No.
Mr Pouliot: There's a mechanism here, and I really need your help. You collect on behalf of the school board. When they come back with their figures, you'll go to your constituents, residential, commercial, industrial, and you will cream off the top your portion to address vis-à-vis this issue, and the school boards, which usually don't have reserves, will take a chance, collect on their behalf -- will they pass it along to their levy?
Mr Connor: I don't know if I can answer that; I'm not sure. I have no expertise in the area of school board finance, and any time I look at the regulations of the Education Act, I cringe.
Mr Trevor Pettit (Hamilton Mountain): I just want to verify with you that this whole thing is the result of, basically, as it says here, the staff member from the Ministry of Revenue, the assessor using an incorrect factor; all of this is strictly the result of one little bureaucratic bungle. Is that correct, in effect?
Mr Connor: In essence, that is correct.
Mr Pettit: In a nutshell, this was because an assessor used an incorrect factor?
Mr Connor: Yes.
Mr Pettit: I would have to agree with Mr Pouliot then that it seems to me it's awfully drawn out for eight years as a result of a bureaucratic bungle, to have to go through all of these appeals etc, but that's basically it in a nutshell, is it?
Mr Connor: Yes.
The Chair: Any further questions?
Mr Joseph Spina (Brampton North): Just a statement: To bring it down to the basic points, yes, this was a bureaucratic bungle by an assessor, and the fact that it was lying around for eight years -- it wasn't just lying around for eight years. As somebody indicated earlier, it was a ping-pong, and the problem was that you had a ping-pong going between three levels of government: the city of Brampton, the region of Peel and the province.
What it boils down to is the simple fact that the financial situation is easily resolved. All parties are prepared to address it: the city is, the municipality is, the school board is. I hardly think it's going to be passed on as an additional levy. By the way, to the other member near me here, I would suggest to you that $100,000 is a lot less than 1% on our mill rate. We have a far larger municipality than most in the province, so I would suggest to you that it comes nowhere near that. But in any case, I don't think there is a major problem here from the point of view of the province. I would endorse the approval of this particular bill.
The Chair: Are members of the committee ready to vote? We will look at section 1 first, on its own.
Shall section 1 carry? Carried.
I would ask Mr Smith, could you inform us of any amendments.
Mr Bruce Smith (Middlesex): As the parliamentary assistant indicated, there are a couple of amendments put before the committee.
I'd like to move that the bill be amended by adding the following sections:
"Revision of collector's roll
"(1.1) The corporation of the city of Brampton shall by bylaw as soon reasonably possible after this act comes into force,
"(a) direct the treasurer of the city to revise the collector's roll in accordance with section 1, including striking from the roll that portion of the taxes no longer due and payable by reason of section 1; and
"(b) refund any amounts that are no longer due and payable as taxes by reason of section 1."
The Chair: Shall the amendment to section 1.1 carry? Carried.
Mr Smith: I guess there are a just a couple of brief items here that perhaps the committee members would be interested in being advised of. The purpose of 1.1(a) and (b) is, firstly, to allow the city to correct the tax collector's roll by recording the correct amount of taxes and, secondly, to allow the city to make the appropriate tax refund. If there are further questions, I would defer to the parliamentary assistant or counsel.
The second part of that amendment deals with section 1.2 and it reads as follows:
"Refund
"(1.2) The provisions of section 421 of the Municipal Act apply to taxes refunded under section 1.1."
The Chair: Any discussion on the second amendment to section 1? Shall the amendment carry? Carried.
As we have done on occasion, combining sections 2, 3, and 4, shall sections 2 through to section 4 carry? Carried.
Shall the preamble carry? Carried.
Shall the title carry? Carried.
Shall this bill, as amended, carry? Carried.
Shall I report this bill to the House? Carried.
I wish to thank the applicants and the sponsor.
Mr David Fleet: I might take this moment to thank both the Chair and Mr Clement for their gracious comments about myself; and as well Mr Clement for sponsoring the bill; and Mr Spina, to whom I had also spoken at some length about it; and as well to thank, on behalf of my client as well as our firm, the city for its innovative approach to helping resolve the litigation; and the members of this committee; and some old friends I see again -- I'm pleased to see you.
For the others, I wish you all the best in your endeavours. I perhaps identify a little bit more than most with the duties on this particular committee, because of my own experience, but I wish you well in all of your endeavours as members.
The Chair: Before our motion to adjourn, could I just remind Mr Shea, Mrs Pupatello and Mr Pouliot if we could briefly get together for the business subcommittee schedule.
Motion to adjourn?
Mr Bisson: That it so be adjourned.
The Chair: This meeting is adjourned.
The committee adjourned at 1110.